Kape Technologies Share Discussion Threads

[mrnumpty] 20/1/2021 10:51

black finance . In reply to you , I suspect that the share price movement of the last few days is a classic illustration of the stock market adage " buy the rumour , sell on the news " . Thus the share price increased in anticipation of the Trading Update and then dropped when the news was announced ( quite regardless of the Company's results exceeding expectations ) . It's just a fact of life which we have to accept in investing .

[rivaldo] 20/1/2021 08:48

Positive overnight update from Investors' Champion - the current multiple is indeed "modest" to say the least:

"Kape: strong update and interesting value

Digital security and privacy software specialist Kape (LON: KAPE), confirmed that revenue for its financial year ending 31 December 2020 is expected to be c.$122.2m, up 85% and at the upper end of management's forecasted range, with the all-important recurring revenue representing c.89% of the total.

Adjusted EBITDA is expected to be ahead of management's expectations at approximately $39.0m, up a whopping 168%.

Demand for digital privacy and security accelerated during the year, partly as a result of remote working, and Kape now supports c. 2.5m paying subscribers across its core markets of North America and Europe – there is a lot to like about a business with this sort of structure and the planned increase in R&D and marketing spend looks a positive move to us.

In response to the update the house broker increased earnings forecasts for 2020 by 5% to 15.4 cents/ 11.3p and by 3% for the year after to 15.2 cents / 11.1p. This suggests a seemingly modest 2021 earnings multiple of 18.6x for a business generating 28% margins operating in a highly supportive market."

[death by donut] 20/1/2021 08:12

Maybe waiting to see the FCF number ?DbD

[gleach23] 19/1/2021 19:20

Might drift down lower next day or 2 - there was certainly good stock availability towards the end of the day. I will look to trade again if it drifts into 180s.

Disappointing to fall back but perhaps the market is awaiting an acquisition before rerating. Still up 33% since late Oct though and could well move higher when we least expect it.

[blackfinance] 19/1/2021 18:39

Thats a really disappointing end to the day. Hard to know what else the company can do really. I thought todays update might be the catalyst for a push to £2.50! More likely a drift down again. Hey ho!

[rivaldo] 19/1/2021 13:59

Unfortunately neither of the joint brokers Shore Capital or Stifel make their research available on Research Tree. Anyone got access to provide a little info as they've presumably issued updates today?

[tole] 19/1/2021 11:59

Thanks for highlighting.. I subscribe but I never knew they had a twitter account. Great to see some regular updates on their feed.

[dicksmoney] 19/1/2021 11:58

JOOI
How many subscribers do you think SCSW
and TMI have ?
Asking for a friend ;-))

[rivaldo] 19/1/2021 11:10

New tweet today from SCSW:



"Small Company Sharewatch
@SCSWSharewatch
·
33m
Nice to see #KAPE forecasts upgraded 5-6% today. Amazing drop through to profit from each additional VPN user especially as costs have been streamlined (consolidating servers, help desk etc)

[adamb1978] 19/1/2021 10:23

So EPS of perhaps 16-17 cents for 2020 or perhaps 12.5p or thereabouts. That should put a floor under the share price.

Excluding M&A, there will be a challenge growing EPS too much this year given the increased share count (will be up around 20%)...however I think we're guaranteed to see further acquisitions, and its great to see how much cost they've taken out over 2020 from the last major one so the management has the credibility for integrating and extracting values from deals.

In the meantime, the multiple isn't remotely demanding (17x PE?) so I dont think its unreasonable to expect to see some multiple appreciation from here, and then I think some meaningful M&A is nailed on.

My base case is for a share price of 300p-ish in 12-18 months and then something like 500p-600 in 2-3 years based on EPS of say 18p and PE of 30x, and then adjusting for cash generated. I think both of those targets can largely be achieved organically with M&A then as a kicker.

One thing to be careful of with EPS figures for Kape is different adjustments which some people make. The amortisation is really split into 3 buckets (right to use assets, acquired intangibles and capitalised development) - personally, I only think the last of those should be included in the recurring cost base.

[essential] 19/1/2021 08:53

Wow thanks. Never knew they had a twitter account. They have never mentioned it in their newsletter

[slogsweep] 19/1/2021 08:51

John09

Thanks

[rivaldo] 19/1/2021 08:51

Ta for that, only 204 followers so it must be pretty new. Should grow quickly I'd imagine.

Progressive Equity have increased their numbers for last year to 15.8c EPS, i.e around 11.7p EPS.

They've left their numbers for this year unchanged at the same 15.8c EPS (remember that 2021 has extra dilution from the placing), but I'd imagine:

(1) they'll increase this year's forecast after the 2020 prelims are published
(2) KAPE are likely to make further - and substantial - acquisitions using their cash pile to highly enhance earnings

I see no reason why the share price shouldn't be anywhere from 300p-400p later this year given the above factors plus the high multiples for stocks in this sector.

[qs99] 19/1/2021 08:46

better to travel etc?

[dicktrade] 19/1/2021 08:25

@SCSWSharewatch on Twitter

[john09] 19/1/2021 08:24

Yep its very new

[slogsweep] 19/1/2021 08:22

John09

where do you get this SCWs tweet I've ben a subscriber for 20 years and not heard of it.

thanks

[dunns_river_falls] 19/1/2021 08:13

Exceptional update, growth is off the charts and a potential acquisition to follow,

[devilsprofessor] 19/1/2021 08:07

Indeed! And what an update!

[dicktrade] 19/1/2021 07:53

Ha Ha, no wonder the CFO was keen to tell me there was a TU due.

[qs99] 19/1/2021 07:18

Yes looks great....how far will it be able to go though? $6m Q

[gswredland] 19/1/2021 07:17

Excellent update. Wish I had bought more on weakness a few months ago

[rivaldo] 19/1/2021 07:11

Excellent trading update - $39m adjusted EBITDA is way ahead of expectations, which were $36.6m from N+1 Singer and $36.2m at Progressive Equity Research.

The outlook is positive, the Balance Sheet is strong, and there's the promise of further acquisitions as well as organic growth. Plus PIA has been integrated ahead of schedule.

All in a sector which is seeing accelerating growth from home working and global internet use.

Enough said.

[nw99] 19/1/2021 07:08

Solid numbers